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TAXPAYER RELIEF ACT OF 1997

Congress passed the Taxpayer Relief Act of 1997. The "Act" creates several new tax benefits for families who are paying the cost of Higher Education, or who are repaying student loans. The benefits provided by the "Act" include the Hope Scholarship & Lifetime Learning Credits, as well as a Student Loan Interest Deduction.

A '1098-T' was issued to all students this year regardless of the number of hours, or the type of aid that the student received. The IRS does not require us to report the dollar amounts during the first two years. Students with Financial Aid or Scholarships may not qualify for the Hope or Lifetime Credit. Please consult your tax practitioner.

The Bursar will be available to provide information on related costs concerning your statement of transactions. The Bursar cannot answer any tax questions, but will be able to provide you with the financial information about your account. Please consult a tax professional who can provide individual or family income tax advice or counsel.

Hope Scholarship

Who Benefits from Credit?
Students who pay qualified expenses and are not claimed as a dependant on a parent's tax return or a taxpayer who claims a student as a dependent. It does not matter whether the taxpayer or student pays the qualified expenses. Either parent or child, but not both, may claim credit for the child's qualified expenses paid during the taxable year. Married individuals, filing separately, are not allowed a tax credit.

What makes a student eligible for this tax credit?
Students enrolled in a degree, certificate or other program leading to a recognized education credential in one of the first two years of post-secondary education. Students must be enrolled at least one-half time during at least one academic period during the taxable calendar year.

Number of years Credit Available?
Credit may be claimed in only the first two years of post-secondary education for each eligible student.

How many credits may be claimed Each Year?
Taxpayer is permitted one credit per student per year.

Credit Calculation
20% of the first $5,000 qualified tuition and fees (maximum $1000 per taxpayer). Credit increased to 20% of the first $10,000 after year 2002.

Taxpayer Relief Act of 1998

Lifetime Learning Credit

Who Benefits from Credit?
Students who pay qualified expenses and are not claimed as a dependant on a parent's tax return or a taxpayer who claims a student as a dependent. It does not make a difference whether the taxpayer or student pays the qualified expenses. Either parent or child, but not both, may claim credit for a child's qualified expenses paid during the taxable year. Married individuals, filing separately, are not allowed a tax credit.

What makes a student eligible for this tax credit?
Students enrolled in a degree, certificate or other program leading to a recognized education credential for graduate or undergraduate work or to improve job skills. No minimum enrollment requirement exits.

Number of years Credit Available?
No limit on number of years that credit may be claimed by taxpayer.

How many credits may be claimed Each Year?
Taxpayer is permitted one $1,000 credit per year regardless of the number of eligible dependent students in the family. For each tax year for which a student may be eligible for the Hope Scholarship, the student's expenses may be used as the basis for a Hope Scholarship Credit or Lifetime Learning Credit, but not for both.

Credit Calculation
20% of the first $5,000 qualified tuition and fees (maximum $1000 per taxpayer). Credit increased to 20% of the first $10,000 after year 2002.

Qualified Expenses
Tuition and fees a student is required to pay "out-of-pocket" in order to be enrolled at the University. Charges and fees associated with room, board, student activities, athletics, insurance, books, equipment, transportation and similar personal living, or family expenses are not qualified. 'Out-of-pocket' expenses are those expenses paid with students' earnings, a loan, gift, inheritance, or personal savings are included; expenses paid with Pell Grant, SEOG, WU Grant, other tax-free scholarship, and tax-free employer provided educational assistance are not counted.

Credit Phase-Out Limits
Credit reduced for single taxpayers that have modified adjusted gross income between $40,000 and $50,000. For married filing jointly, credit phases out for modified adjusted gross income between $80,000 and $100,000.

Please consult your personal tax advisor to determine your eligibility for education tax credits.

 

 

 

 

 

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